Care properties as an investment – demographic tailwind in Oberfranken
Care properties (Pflegeimmobilien) – apartments in care facilities that are bought individually as an investment – combine the security of long-term leases with the demographic trend of an ageing society. In Oberfranken, where the share of people over 65 is particularly high, demand for care places is rising structurally.
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Key points at a glance
- With a care property, investors buy a single apartment in a care facility that an operator leases on a long-term basis.
- Leases of 20 to 25 years and gross yields of about 3.5 to 5% are typical.
- The management effort is low; the central risk lies with the operator.
- Demand for care places in Oberfranken is rising as the population ages.
- Before buying, the operator, lease, maintenance rules and location should be checked.
How does a care property work as an investment?
You buy a single care unit (apartment) within a care facility. The entire facility is leased by an operator, who organises its operation and occupancy. You receive a fixed monthly rent – regardless of whether your unit is occupied.
Typical key figures:
Purchase price: €100,000–200,000 per unit. Lease term: 20–25 years. Gross yield: 3.5–4.5%. Management effort: minimal (no tenant management).
Opportunities and risks
Opportunities: long-term income, low effort, demand supported by demographics, tax depreciation, preferential occupancy right if you need care.
Risks: dependence on the operator (insolvency risk), limited alternative use, lower liquidity than conventional residential property, no influence on how the facility is run.
Locations in Oberfranken
Demand for care places is particularly high in Oberfranken because of its demographic structure. Relevant locations: Bayreuth, Hof, Coburg, Kulmbach and the spa towns of Bad Steben (Frankenwald) and Bad Berneck (Fichtelgebirge). → Demographic trends
What to check before buying
| Point to check | Why it matters |
|---|---|
| Operator | experience, size, financial stability – the operator pays the rent |
| Lease | term, indexation, extension options |
| Maintenance | Who bears the structural repairs, who the interior fittings? |
| Reserve | the amount of the owners' association's maintenance reserve |
| Location | need for care places, competition, accessibility for relatives |
| Building standard | single-room ratio and structural requirements under state law |
| Resale | the secondary market for care apartments is smaller than for flats |
Worked example
A care apartment for €160,000 with an annual rent of €6,400 gives a gross yield of 4.0%. After deducting management and your own share of maintenance, around 3.3 to 3.6% net remains. The rent is often linked to the consumer price index. The building share is depreciated with the regular depreciation allowance (AfA) – see Depreciation on property.
Care property or conventional flat?
| Care apartment | Rented freehold flat | |
|---|---|---|
| Effort | very low | low to medium |
| Yield | rather lower | similar or higher, depending on location |
| Tenant changes | no tenants of your own | regular |
| Influence | hardly any influence on operations | full say over letting |
| Resale | specialised pool of buyers | broad market |
| Personal use | only via the preferential occupancy right | possible at any time |
Care properties suit investors who want little effort and who check the operator carefully. Anyone looking for more influence and a larger resale market is often better served by conventional flats. More on demographic trends in the market report Demographics, and barrier-free alternatives under Barrier-free living.
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Frequently asked questions
What happens if the operator becomes insolvent?
In the worst case, rent payments are suspended until a new operator is found. In such cases, care facilities are usually kept running because the need exists – even so, checking the operator is the most important step before buying.
What does the preferential occupancy right mean?
Many contracts provide that owners and their relatives receive priority for a place in the facility or in the operator's group if they themselves need care. There is usually no entitlement to their own apartment specifically.
Can I sell a care apartment again?
Yes, but the pool of buyers is smaller than for flats. The remaining term of the lease and the condition of the operator have a strong influence on the price.
Sources & further reading
- statistik.bayern.de – Bavarian State Office for Statistics – care statistics and population projections
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